Belt and Road

Belt and Road provides exporters with a brief analysis of political and economic risks for more than 60 countries under the Belt and Road initiative.
 

  

 

Key Information

 

Capital

Prague

 

Population

10.6 million

 

Area

78,867 sq km

 

Currency

Czech koruna (1 CZK = 0.0454 USD or 0.0390 EUR as of 31 October 2017)

 

Official language

Czech

 

Form of government

Parliamentary republic

 

Ease of doing business by World Bank

# 27 out of 190 in 2017 (1)

 

The Global Competitiveness Index by the World Economic Forum

# 31 out of 137 in 2017/18 (no change)

 

Logistics Performance Index by World Bank

# 26 out of 160 in 2016

 

Major merchandise exports (% of total, 2015*)

Major merchandise imports (% of total, 2015*)

 

Manufactured goods (88.4%)

Manufactured goods (82.3%)

 

Agricultural products (6.3%)

Fuels and mining products (10.0%)

 

Fuels and mining products (4.6%)

Agricultural products (7.4%)

 

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

 

European Union (83.7%)

European Union (67.3%)

 

USA (2.2%)

China (12.7%)

 

Russia (1.9%)

South Korea (2.5%)

 

* Most recent year for which data are available

Source: World Trade Organization

 

Political Highlights

 

Czechia is a parliamentary republic. It is one of the most stable and prosperous markets in Central Europe. The President is the head of state while the Prime Minister is the head of government. In the parliamentary elections held in October 2017, ANO, an “anti-establishment” party founded by billionaire tycoon Andrej Babis scored a resounding victory, ending a quarter of a century of political dominance by mainstream parties.

ANO collected a share of almost 30% of the vote, nearly three times that of its closest rival, the centre-right Civic Democratic Party. Two other anti-establishment groups, the Pirate party and the far-right SPD, claimed third and fourth place, respectively. Amid a wave of successes for European populists and the refugee crisis in Europe, the ruling centre-left Social Democrats (CSSD) saw its share of the vote tumble to become the sixth-largest party, even though the election took place against the backdrop of a growing economy which boasted the lowest unemployment rate in the EU.

Drawing on his career in the private sector, Babis portrayed himself as a businessman and pledged to run the country more efficiently like a business. He also pledged to boost investment, fight corruption and keep out refugees. Czechia joined the EU in 2004, but the EU’s mandatory refugee quota system increased Euroscepticism and anti-immigration sentiment in the country. While Babis was sharply critical of the EU’s migrant policies, he said that the country should still stay in the EU.

 

Economic Trend

* Estimates  ^ Forecasts

Source: Economist Intelligence Unit

Czechia has a highly-open economy with exports accounting for roughly 80% of GDP. Emerging as an important gateway to the EU market, it has one of the most skilled workforces and the best infrastructures in the region. It plays an important role in the Germany-Central European supply chain. Manufacturing is a major economic activity, especially with regards to the production of automobiles, machine tools, and engineering products. In recent years, the country has been successful at attracting foreign direct investment (FDI). The Czech economy is forecast to grow by 4.5% in 2017, up from the 2.5% growth in 2016, largely driven by domestic demand with private consumption as a key driver.

Due to strong capital inflows and low inflation, the central bank had previously committed to intervene in the foreign exchange market and prevent a rally in the koruna by keeping the currency close to CZK 27 per euro. Keeping the currency relatively weak helped to push up import prices and fuel inflation. In April 2017, the upper limit on the koruna that had been in place for over three years was finally removed as inflation was back on track. Since then, the koruna has appreciated against the euro by over 4%. On euro accession, the country does not have a target date to adopt the euro, and public support for the euro is low. The manifesto of the ANO stated that the country would not adopt the euro if the eurozone does not carry out significant reforms.

GDP per capita at purchasing power parity in Czechia was 88% of the EU average in 2016, which is high by regional standards, and above the levels in Poland (69%), Hungary (67%) and Slovakia (77%). As an export-oriented country, Czechia will benefit from closer economic integration with the EU and continue to serve as a manufacturing base for the EU. On the other hand, the Czech economy remains sensitive to changes in the economic performance of the EU, which is the destination of over 80% of the country’s exports. In the meantime, the country has an ageing population. The labor force is projected to decline gradually due to demographic factors, thus placing pressures on public finances in the longer-term.

 

Hong Kong –Czechia Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Czechia decreased by 19.2% from HK$6,927 million in 2015 to HK$5,595 million in 2016. The top three export categories to Czechia were: (1) telecommunications, audio & video equipment (-26.9%), (2) electrical machinery, apparatus & appliances, & parts (-13.1%), and (3) office machines & computers (+14.3%), which represented 80.7% of total exports to Czechia.

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Czech buyers. Currently, the insured buyers in Czechia are mainly small and medium sized companies. For 2016, the number and amount of credit limit applications on Czech Republic decreased by 2.6% and increased by 12.8% respectively, while insured business decreased by 15.2%. Major insured products were electronics, electrical appliances and toys, which represented 76.1% of ECIC’s insured business on Czechia. The Corporation’s underwriting experience on Czechia has been satisfactory, with two claim payment cases of small amount reported during the past 12 months (from October 2016 to September 2017), involving jewellery and electronics.

Please click here to download the charts (PDF format)

 

Last update: 31 October 2017

 



Key Information

Capital

Yerevan

Population

3.0 million

Area

29,743 sq km

Currency

Armenian Dram (1 AMD = 0.0021 USD as of 27 October 2017)

Official language

Armenian

Form of government

Parliamentary democracy

Ease of doing business by World Bank

# 38 out of 190 in 2017 (5)

The Global Competitiveness Index by the World Economic Forum

# 79 out of 137 in 2017/18 (3)

Logistics Performance Index by World Bank

# 141 out of 160 in 2016

Major merchandise exports (% of total, 2015*)

Major merchandise imports (% of total, 2015*)

Fuels and mining products (42.4%)

Manufactured goods (54.2%)

Agricultural products (26.3%)

Fuels and mining products (23.5%)

Manufactured goods (23.5%)

Agricultural products (21.7%)

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

European Union (26.9%)

Russia (30.8%)

Russia (20.9%)

European Union (22.0%)

Georgia (8.0%)

China (11.0%)

* Most recent year for which data are available

Sources: World Trade Organization

Political Highlights

 

Serge Sarkisian of the Republican Party won a second five-year term as president in 2013. He pushed for constitutional reforms to change the government type from a semi-presidential system to a parliamentary one. A new parliament was elected in April 2017 under the revised constitution, and in spring 2018, the president will be elected by parliament rather than by popular vote.

After independence from the Soviet Union in 1991, Armenia, which has a Christian majority, was involved in a long-standing conflict with largely-Muslim Azerbaijan over the mostly Armenian-speaking region of Nagorno-Karabakh. The territory and surrounding regions are now controlled by Armenian-backed forces. Negotiations between the two countries have so far failed to reach a permanent peace agreement, and clashes between Azerbaijan and Armenia have intensified in recent years. Although spiraling into an all-out war is unlikely, it cannot be ruled out.

Armenia formally joined Russia-led Eurasian Economic Union in 2014, further strengthening its ties with Russia. It has also expressed interest in expanding economic ties with the European Union, and in March 2017, an EU-Armenia Comprehensive and Enhanced Partnership Agreement was initialed. On the other hand, chance of re-establishment of diplomatic ties with Turkey, which supports Azerbaijan, remains slim in the wake of continuous tensions in Nagorno-Karabakh.

Economic Trend

* Estimates

Source: International Monetary Fund (IMF)

 

Armenia has rich deposits of mineral resources such as iron and copper, which contribute to over half of the country’s exports. The economy relies on mining, agriculture, remittances from overseas workers (mainly from Russia), and financial support from Russia and international organizations. Armenia has only two open trade borders (with Iran and Georgia) because its borders with Azerbaijan and Turkey are closed as a result of the ongoing conflict with Azerbaijan. Geographic isolation, dependence on remittances and a narrow export base have made the country vulnerable to decline in commodity prices and dependent on the Russian economic cycle.

Since late 2014, significant declines in remittances and commodity prices have weighed on economic growth, and have adversely impacted the fiscal position. In 2016, real GDP growth slowed to 0.2% only, while the budget deficit widened to 5.6% of GDP. In an attempt to boost growth, the Central Bank of Armenia gradually reduced its policy rate from 8.75% in December 2015 to the current level of 6.0%.

Economic activity in 2017 is showing signs of recovery. For the first half of the year, it grew 6% yr/yr, due to strong growth in exports and a recovery in private demand. With an improving outlook on Armenia’s major trading partner Russia, and a pickup in private sector activities, the growth momentum appears to have sustained into the third quarter, and real GDP growth for the year is projected to rebound to over 3%.

Hong Kong – Armenia Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Armenia increased by 33.2% from HK$88 million in 2015 to HK$117 million in 2016. The top three export categories to Armenia were: (1) telecommunications, audio & video equipment (+57.3%), (2) photographic apparatus, equipment and supplies and optical goods, nes; watches and clocks (-9.8%), and (3) non-metallic mineral manufactures, nes (+207.5%), which represented 80.9% of total exports to Armenia.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) offers coverage on Armenian buyers with payment terms in Irrevocable Letter of Credit (ILC) and on a case-by-case basis. In the past 12 months (from October 2016 to September 2017), there was no insured business on Armenia.

 

 

Please click here to download the charts (PDF format).

 

Last update: 31 October 2017

 

 

Key Information

Capital

Abu Dhabi

Population

9.3 million

Area

83,600 sq km

Currency

UAE dirham (pegged with USD at 1 AED = 0.272 USD)

Official language

Arabic

Form of government

Federation of seven emirates

Ease of doing business by World Bank

# 26 out of 190 in 2017 (8)

The Global Competitiveness Index by the World Economic Forum

# 17 out of 137 in 2017/18 (↓1)

Logistics Performance Index by World Bank

# 13 out of 160 in 2016

Major merchandise exports (% of total, 2015)

Major merchandise imports (% of total, 2015)

Manufactured goods (45.6%)

Manufactured goods (78.7%)

Fuels and mining products (23.8%)

Agricultural products (8.6%)

Agricultural products (3.9%)

Fuels and mining products (5.7%)

Top three export markets (% of total, 2015)

Top three import markets (% of total, 2015)

Iran (3.2%)

European Union (14.3%)

India (3.2%)

China (8.0%)

European Union (3.1%)

USA (6.7%)

Sources: Economist Intelligence Unit, World Trade Organization

Political Highlights

 

The United Arab Emirates (UAE) is a federation of seven emirates. The president and vice-president are elected by the Federal Supreme Council, which is the top policy-making body in the country, for a five-year term with no term limits. With vast energy-related wealth, Abu Dhabi is the most influential emirate and its ruler Sheikh Khalifa bin Zayed al-Nahyan has been president since 2004. By convention, the ruler of Dubai is the prime minister and vice-president. Overall, the political environment of the UAE is broadly stable thanks to the country’s prosperity and generous social welfare benefits.

The UAE has no income tax and no federal-level corporate tax, but the persistently low global oil prices have hurt the country’s oil export revenues and prompted changes in fiscal policy. In a bid to strengthen its public finances, the UAE reduced state spending and removed some fuel subsidies in a politically sensitive reform. Other measures included the introduction of excise taxes on tobacco, alcohol, and soft drinks from 1 October 2017; and value-added tax (VAT) from January 2018.

The UAE is located at a strategic position bordering the Arabian Gulf, the Indian Ocean and the Strait of Hormuz, and less than 100 miles from Iran. The United States is the country’s important ally and main security guarantor. In the face of regional insecurity, the UAE has adopted an increasingly active foreign policy. In June, the UAE joined Saudi Arabia, Egypt and Bahrain in cutting diplomatic ties with Qatar, accusing it of supporting terrorism and destabilizing the region.

Economic Trend

* Estimates

Source: International Monetary Fund (IMF)

 

The UAE is among the world's major oil producers and is a member of the Organization of the Petroleum Exporting Countries (OPEC), but successful efforts at economic diversification have reduced its reliance on the oil sector. Free trade zones, which offer 100% foreign ownership and zero taxes, and a generally liberal trade regime help attract foreign investment. The UAE is now a regional hub for trade, finance, transport and tourism.

Although the UAE’s economy is less dependent on the oil sector than other neighboring Gulf states, it has still been weighed by the persistently low oil prices and OPEC-mandated cuts in oil production. Real GDP growth is expected to decelerate further to 1.3% this year, its slowest pace in nine years. Despite continued fiscal consolidation, lower oil revenues have caused the country to register fiscal deficits since 2015.

Having said that, the UAE has ample financial reserves which help support the country’s economic and fiscal resilience. At the end of 2016, net international investment position was estimated at 167% of GDP according to the IMF, largely because of the massive assets held in sovereign wealth funds, while level of international reserves was comfortable and estimated at 24% of GDP.

The UAE maintains close economic ties with China. Both countries have agreed to establish a joint strategic investment fund worth US$10 billion, financed equally by both countries. Meanwhile, the UAE is one of the most active Middle East countries using the yuan for direct payments to China and Hong Kong. The latest available data showed that the currency accounted for over 80% of these payments by value in August 2016.

 

Hong Kong – UAE Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to UAE increased by 13.2% from HK$46,942 million in 2015 to HK$53,140 million in 2016. The top three export categories to UAE were: (1) non-metallic mineral manufactures, nes (+32.0%), (2) telecommunications, audio & video equipment (+23.1%), and (3) office machines & computers (-16.0%), which represented 78.3% of total exports to UAE.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering UAE buyers. Currently, the insured buyers in UAE are mainly small and medium-sized companies. For 2016, the number and the amount of credit limit applications increased by 14.3% and 2.6% respectively, while the insured business decreased by 9.5%. Major insured products were clothing, electrical appliances and metallic products, which represented 59.6% of ECIC’s insured business on UAE. The Corporation’s underwriting experience on UAE has been acceptable, with one payment difficulty case and three claim cases reported in the past 12 months (from October 2016 to September 2017), involving jewellery, clothing and chemical products.

 

Please click here to download the charts (PDF format).

 

Last update: 24 October 2017


 

Key Information

 

Capital

Sri Jayewardenepura (Administrative) and Colombo (Commercial)

 

Population

20.8 million

 

Area

65,610 sq km

 

Currency

Sri Lankan Rupee (1 LKR = 0.0065 USD as of 20 October 2017)

 

Official language

Sinhala, Tamil

 

Form of government

Republic

 

Ease of doing business by World Bank

# 110 out of 190 in 2017 (↓1)

 

The Global Competitiveness Index by the World Economic Forum

# 85 out of 137 in 2017/18 (↓14)

 

Major merchandise exports (% of total, 2016)

Major merchandise imports (% of total, 2016)

 

Textiles & garments (47.4%)

Machinery & transport equipment (26.8%)

 

Tea (12.3%)

Cotton yarn and textiles (13.9%)

 

Petroleum products (2.8%)

Mineral products (12.8%)

 

Top three export countries (% of total, 2016)

Top three import countries (% of total, 2016)

 

USA (27.3%)

India (21.7%)

 

UK (10.1%)

China (12.1%)

 

India (7.3%)

UAE (6.1%)

 

Source: Economist Intelligence Unit

 

Political Highlights

 

Maithripala Sirisena has become Sri Lankan president after a surprise victory over incumbent Mahinda Rajapaksa in the 2015 election. Sirisena has vowed to fight corruption, and bring constitutional reforms to shift political power from the presidency to parliament. He has proposed plans for a new constitution, whose passage requires a two-thirds majority in parliament and endorsement in a national referendum.

Sri Lanka has been scarred by a three-decade civil war arising from ethnic tensions between Sinhalese majority, predominantly Buddhists, and Hindu Tamil minority in the northeast. The war ended in 2009 when government forces seized the last area controlled by Tamil Tiger rebels, but splits are unlikely to be healed quickly. Economic development especially in rural areas and national reconciliation are the government’s priority. The new constitution is expected to address the issue by providing the Tamil with more autonomy.

Sri Lanka is located virtually at the center of the Indian Ocean, straddling some of the world's busiest sea lanes. It is an important component of China's Belt and Road initiative and represents a trans-shipment hub for Chinese goods delivering to Africa and the Middle East. China is investing massively in infrastructure in Sri Lanka. Although the Sirisena administration suspended some projects when he came to power, both countries would have an interest in ensuring that relations remain intact. Meanwhile, Sri Lanka will continue to strengthen relations with India, due to geographical proximity, political influence from India's Tamil community and their economic ties.

 

Economic Trend

* Estimates
^ Forecasts

Source: Economist Intelligence Unit

 

Following the end of the civil war, Sri Lanka registered robust economic growth, largely driven by reconstruction projects and an expanding tourism sector. However, there have been signs of slowdown. For 2017, economic growth is forecast to slow to 4.2%, as the agricultural sector, which employs around 30% of the labour force, was hit by natural disasters such as droughts, floods and landslides. Growth is expected to rebound next year when agricultural production normalizes and infrastructure projects pick up.

While economic performance in Sri Lanka has been impressive over the past decade, macroeconomic health remains a concern with large budget deficit and rising public debt. Last year, the country reached an agreement with the International Monetary Fund for US$1.5 billion in loans to help restore macroeconomic stability. In return, the government needs to carry out fiscal reforms, aiming to narrow the budget deficit to 3.5% of GDP by 2020.

Currently, wealth is concentrated in the western province where Colombo is located, resulting in large regional disparities. The infrastructure development in the north and east since the end of the civil war has helped narrow the income gap. Notably, many tourism developments are progressing in areas outside the western province. Nevertheless, urban residents, particularly those in Colombo will continue to act as the main source of consumption power in Sri Lanka.

 

Hong Kong – Sri Lanka Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Sri Lanka decreased by 0.3% from HK$4,001 million in 2015 to HK$3,991 million in 2016. The top three export categories to Sri Lanka were: (1) textiles (-4.7%), (2) telecommunications, audio & video equipment (+31.9%), and (3) clothing & clothing accessories (+0.9%), which represented 69.9% of total exports to Sri Lanka.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Sri Lankan buyers. Currently, the insured buyers in Sri Lanka are mainly small and medium sized companies. For 2016, the number and the amount of credit limit applications on Sri Lanka decreased by 33.3% and 47.3% respectively, while insured business decreased by 20.1%. Major insured products were textiles, clothing and office & stationery supplies, which represented 93.9% of ECIC’s insured business on Sri Lanka. The Corporation’s underwriting experience on Sri Lanka has been satisfactory, with no claim payment or payment difficulty case reported during the past 12 months (from October 2016 to September 2017).

Please click here to download the charts (PDF format)

 

Last update: 23 October 2017

 

 



Key Information

 

Capital

Riyadh

 

Population

31.8 million

 

Area

2,149,690 sq km

 

Currency

Saudi Riyal (pegged to the US dollar at 1 USD = 3.75 SAR)

 

Official language

Arabic

 

Form of government

Monarchy

 

Ease of doing business by World Bank

# 94 out of 190 in 2017 (↑2)

 

The Global Competitiveness Index by the World Economic Forum

# 30 out of 137 in 2017/18 (↓1)

 

Logistics Performance Index by World Bank

# 52 out of 160 in 2016

 

Major merchandise exports (% of total, 2015*)

Major merchandise imports (% of total, 2015*)

 

Mineral products (75.4%)

Machinery & transport equipment (45.7%)

 

Chemicals (7.6%)

Foodstuffs (14.0%)

 

Plastics (7.5%)

Chemical & metal products (8.4%)

 

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

 

China (13.6%)

China (16.2%)

 

Japan (11.3%)

USA (15.0%)

 

India (10.7%)

Germany (6.3%)

 

* Most recent year for which data are available

Source: Economist Intelligence Unit

Political Highlights


As a leading oil producer in the world, and also the birthplace of Islam, Saudi Arabia is a major power in the Middle East and the Arab world. Islam is the sole official religion, with Sunnis making up 90% of the population. The Al-Saud family has been ruling Saudi Arabia since the kingdom’s foundation in 1932. Modest political reforms, such as granting women more rights, have been introduced, but bold political reform is unlikely due to strong objections from conservatives. King Salman bin Abdul-Aziz al-Saud, aged 81, ascended the throne in 2015. To pave the way for a smooth transfer of power to the next generation, his son and crown prince, Mohammed bin Salman, has been given a major role in policymaking.

The rule of the Al-Saud family remains secure, but the kingdom is facing a number of challenges. Amid the persistently weak oil prices which have depressed the government’s primary source of income, the government has increased domestic prices for fuel and other utilities, which have the risk to provoke a social backlash. The government will need to boost the private sector and step up its drive to diversify the economy away from its dependence on oil.

Meanwhile, the country is facing threats from Islamic extremism, as well as with regards to regional insecurity. In June, Saudi Arabia, along with the UAE, Egypt and Bahrain, cut off diplomatic ties with Qatar, accusing it of supporting terrorism. In the face of regional turmoil, Saudi Arabia has assumed a more proactive role. However, there is fear that the Sunni-Shia tensions will be further unleashed, posing a security threat to the kingdom.

Economic Trend

 * Estimates  ^ Forecasts

  Source: Economist Intelligence Unit

 

Saudi Arabia is an oil-based economy with strong government controls over major economic activities. It is a dominant member of the Organization of the Petroleum Exporting Countries (OPEC). According to the OPEC, Saudi Arabia possesses 22% of the world’s proven petroleum reserves and ranks as the world’s largest exporter of petroleum. The oil and gas sector accounts for roughly 50% of its GDP and 85% of its export earnings. Thanks to vast oil resources, Saudi Arabia is one of the wealthiest countries in the Middle East. However, the dominance of the oil sector has also made Saudi Arabia’s economy vulnerable to oil price volatility. As oil prices have sunk from their recent peak of above US$110 per barrel in mid-2014 to the current level of around US$50 per barrel, Saudi economy is facing a sharp economic adjustment.

As oil revenues account for over 80% of government revenues, Saudi Arabia’s public finances have deteriorated, due to low oil prices and after years of spending its massive oil wealth to support the local economy and provide subsidized energy and other utilities. In 2016, the kingdom incurred a budget deficit at 12.8% of GDP, which was financed by bond sales and drawing down reserves. Against this background, the OPEC, the Saudi Arabia-led cartel which accounts for a third of global oil supply, has agreed to cut production from January 2017 until March 2018, in an effort to prop up prices. However, relatively low oil prices are likely to persist for some time and the extent of any oil price rebound will be limited by the US shale gas production.

That said, Saudi Arabia should be able to tolerate lower oil prices more readily compared to some other oil-producers because of its substantial fiscal buffer. At the end of March 2017, foreign-exchange reserves stood at roughly US$587 billion. Saudi Arabia also acknowledged that it should reduce oil dependency. Last year, the government unveiled a major economic reform plan, Saudi Vision 2030. The plan, which seeks to attract foreign investment and enhance the overall competitiveness of the Saudi Arabian economy, includes the sale of up to 5% of the state-owned oil company, ARAMCO, and economic diversification through development of the private sector.

Hong Kong – Saudi Arabia Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Saudi Arabia increased by 15.6% from HK$7,243 million in 2015 to HK$8,371million in 2016. The top three export categories to Saudi Arabia were: (1) telecommunications, audio & video equipment (+31.6%), (2) office machines & computers (+58.8%), and (3) power generating machinery and equipment (+61.7%), which represented 75.0% of total exports to Saudi Arabia.

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience


The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Saudi Arabian buyers. Currently, the insured buyers in Saudi Arabia are mainly small and medium-sized companies. For 2016, the number and the amount of credit limit applications on Saudi Arabia decreased by 20.0% and 54.1% respectively, while the insured business decreased by 28.9%. Major insured products were electrical appliances, toys and metallic products, which represented 69.0% of ECIC’s insured business on Saudi Arabia. The Corporation’s underwriting experience on Saudi Arabia has been satisfactory, with no payment difficulty or claim payment case reported in the past 12 months (October 2016 to September 2017).

Please click here to download the charts (PDF format)

 

Last update: 11 October 2017

 

 



Key Information

Capital

Tashkent

Population

31.5 million

Area

447,400 sq km

Currency

Uzbekistan Som (1 USD = 8,077 UZS as of 27 September 2017)

Official language(s)

Uzbek

Form of government

Presidential republic

Ease of doing business by World Bank

# 87 out of 190 in 2017 (5)

Logistics Performance Index by World Bank

# 118 out of 160 in 2016

Source: Economist Intelligence Unit

Political Highlights

 

Uzbekistan emerged as an independent country in 1991 following the breakup of the Soviet Union. Predominantly Sunni Muslim, it is the most populous Central Asian country. The first president, Islom Karimov, led the country for 25 years until his death in September 2016. Under his strongman rule, Uzbekistan continued Soviet-style governing and crushed all opposition. His successor, former Prime Minister Shavkat Mirziyoyev, assumed office in December after winning a landslide victory in the presidential election. He has committed to policy continuity but has shown some willingness to reform.

On the diplomatic front, Mirziyoyev has sought to improve relations with Uzbekistan’s Central Asian neighbors, which were strained under the previous administration due to disputes over border demarcation and water resources. Mirziyoyev has also expressed greater interest in bilateral security cooperation with Russia than his predecessor. In the meantime, Uzbekistan, once at the heart of the ancient Silk Road trade route, has established closer ties with China. Last year, they agreed to upgrade their bilateral relationship to a "comprehensive strategic partnership".

Economic Trend


* Estimates

Source: International Monetary Fund

 

Since its independence, Uzbekistan has largely maintained its Soviet-style command economy with subsidies and tight controls on production and prices, among other things. The economy is based primarily on agriculture, natural resource extraction, and remittances from workers abroad (mainly in Russia). Over the past decade, the economy has grown rapidly thanks to increased exports of gas, gold and copper.

 

The impact of low commodity prices and the economic slowdown in neighboring Russia and China were offset by countercyclical fiscal and monetary policies. Last year, real GDP growth remained fast at 7.8%. According to the World Bank, the main driver was investment, which grew at 9.5%. Private consumption recovered in 2016 following a considerable slowdown in 2015, due to increases in public sector wages, pensions and social allowances.

 

As commodity prices are unlikely to return to the high levels of the past decade anytime soon, Uzbekistan will need to find new drivers of economic growth in the future. The government is taking steps to liberalize the economy, including a key reform in September 2017 that liberalized access to foreign exchange and made the Uzbekistani Som fully convertible. As a consequence, the currency was devalued by 92% against the US dollar. While the devaluation will reduce private consumption and push up inflation in the short term, the reform is expected to improve the business environment and spur foreign investment over time.

 

Hong Kong – Uzbekistan Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Uzbekistan decreased by 14.5% from HK$169 million in 2015 to HK$144 million in 2016. The top three export categories to Uzbekistan were: (1) telecommunications, audio & video equipment (-50.2%), (2) professional, scientific & controlling instruments/apparatus (+1,703.9%), and (3) electrical machinery, apparatus & appliances, & parts (+64.9%), which represented 83.3% of total exports to Uzbekistan.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) offers coverage on Uzbekistani buyers with payment terms in Irrevocable Letter of Credit (ILC) and on a case-by-case basis.  In the past 12 months (from September 2016 to August 2017), there was no insured business on Uzbekistan.

 

 

Please click here to download the charts (PDF format).

 

Last update: 28 September 2017


 

 

Key Information

Capital

Dushanbe

Population

8.5 million

Area

144,100 sq km

Currency

Tajikistani Somoni (1 TJS = 0.1136 USD as of 25 September 2017)

Official language

Tajik

Form of government

Presidential republic

Ease of doing business by World Bank

# 128 out of 190 in 2017 (2)

The Global Competitiveness Index by the World Economic Forum

# 77 out of 138 in 2016/17 (3)

Logistics Performance Index by World Bank

# 153 out of 160 in 2016

Source: Economist Intelligence Unit

 

Political Highlights

 

Tajikistan became independent in 1991 following the breakup of the Soviet Union. After a five-year civil war at the onset of independence, some stability has returned to Tajikistan. President Emomali Rahmon has been in power since 1994, and was re-elected for a fourth term in 2013. Having a firm grip on power, he further strengthened his position by designating himself “Leader of the Nation” with limitless terms and lifelong immunity through constitutional amendments.

Externally, relations with neighboring Uzbekistan and Kyrgyzstan are strained due to disputes over border demarcations and control of water resources. On the other hand, Tajikistan maintains close ties with Russia, which provides military aids and has troops basing rights in Tajikistan until 2042. Tajikistan is also expanding its ties with China, which has extended credits to the country and has helped to build roads, tunnels and power infrastructure.

Economic Trend



* Estimates

# Data is sourced from Economist Intelligence Unit

Source: International Monetary Fund

Tajikistan is a mountainous country with less than 7% of the land area arable. Its GDP per capita is one of the lowest among the 15 former Soviet Republics. Because of a lack of employment opportunities, more than one million Tajik citizens work abroad (roughly 90% in Russia). Remittances from these workers, together with revenues from aluminum and cotton exports, are the main contributors to Tajikistan’s economy. 

Over the past few years, Tajikistan’s economy has been weighed down by low commodity prices and the economic slowdown in Russia. According to the Central Bank of Russia, remittances from Russia to Tajikistan in US dollar terms fell by 43% in 2015 year-on-year and 1.4% in 2016. As a result, Tajikistan’s currency, the somoni, has come under pressure and lost almost half of its value against the US dollar since 2014, leading to higher import costs and inflation. The National Bank of Tajikistan had intervened to support the currency with measures including controls to restrict households' and companies' access to foreign exchange.

Since the end of the civil war, Tajikistan has pursued economic reforms in order to improve competitiveness. However, private-sector development has been slow despite some progress in privatizing public enterprises. Difficult environment for doing business, and inadequate infrastructure, in particular an insufficient and unreliable energy supply, remain major hurdles to attracting foreign investment. To address this, Tajikistan has begun building the Rogun hydroelectric power plant, a US$ 3.9 billion project which is expected to start providing electric power in late 2018.

Hong Kong – Tajikistan Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Tajikistan decreased by 77.1% from HK$30 million in 2015 to HK$7 million in 2016. The top three export categories to Tajikistan were: (1) telecommunications, audio & video equipment (-81.0%), (2) electrical machinery, apparatus & appliances, & parts (-66.1%), and (3) general industrial machinery and equipment, nes, and machine parts, nes (+38.2%), which represented 83.4% of total exports to Tajikistan.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) offers coverage on Tajikistani buyers with payment terms in Irrevocable Letter of Credit (ILC) and on a case-by-case basis.  In the past 12 months (from September 2016 to August 2017), there was no insured business on Tajikistan.

 

 

Please click here to download the charts (PDF format).

 

Last update: 26 September 2017



Key Information

Capital

Ashgabat

Population

5.4 million

Area

488,100 sq km

Currency

Turkmenistani Manat (pegged to the US dollar at 1 USD = 3.5 TMT)

Official language

Turkmen

Form of government

Presidential republic

Logistics Performance Index by World Bank

# 140 out of 160 in 2016

Source: Economist Intelligence Unit

 

Political Highlights

 

Turkmenistan became an independent country in 1991 following the breakup of the Soviet Union. It is a country in Central Asia known for its large gas reserves. Most of the citizens are ethnic Turkmen, who are mostly Muslims. Constitutional changes passed in 2016 extended presidential term limits from five to seven years, and removed the 70-year age limit for holders of presidential office. In February 2017, Gurbanguly Berdymukhamedov, who has ruled Turkmenistan since 2007, was sworn in as president for a third consecutive term.

In recent years, the government focused on adjusting to the impact of low global energy prices and diversify gas export markets. Turkmenistan, which once almost solely relied on Russia for its gas exports, has now turned to the Chinese market as exports to Russia have come to a halt due to pricing disputes. In the meantime, with its UN-recognized status as a neutral country, Turkmenistan avoids formal engagement in multilateral organizations, and co-operation with neighboring countries is limited.

Economic Trend


* Estimates

Source: International Monetary Fund

 

Turkmenistan is the sixth largest natural gas reserve holder in the world. Although it is not a major player in energy markets because of the lack of infrastructure, the hydrocarbon sector still plays a vital role in its economy. According to the World Bank, this sector, which is controlled by the state, accounts for half of the GDP, more than 90% of exports and more than 80% of fiscal revenues. While agriculture employs nearly half of the country's workforce, it accounts for only one-tenth of the GDP.

Economic growth of Turkmenistan has been stable at above 6% in recent years, supported by rising gas export volumes to China. Looking ahead, economic growth will remain highly dependent on hydrocarbon and related sectors. Despite the ongoing and planned diversification of markets, Turkmenistan’s exports are basically dependent on a single market (China) and a single product (natural gas), making the economy vulnerable to external shocks such as a sharp decline in global commodity prices.

Turkmenistan has a large current account deficit and pressures are building on the manat, which is officially pegged to the US dollar. To defend the peg, the central bank has tightened restrictions on access to foreign exchange. However, pressures on the currency raise speculations that there will be a devaluation by the end of 2017. 

Hong Kong – Turkmenistan Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Turkmenistan decreased by 39.8% from HK$95 million in 2015 to HK$57 million in 2016. The top three export categories to Turkmenistan were: (1) telecommunications, audio & video equipment (-48.8%), (2) electrical machinery, apparatus & appliances, & parts (+1,381.7%), and (3) office machines & computers (-46.2%), which represented 96.6% of total exports to Turkmenistan.

 

Source: Census and Statistics Department of Hong Kong

 

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) offers coverage on Turkmen buyers with payment terms in Irrevocable Letter of Credit (ILC) and on a case-by-case basis. In the past 12 months (from September 2016 to August 2017), there was no insured business on Turkmenistan.

 

 

Please click here to download the charts (PDF format).

 

Last update: 26 September 2017

 

Key Information

Capital

Dhaka

Population

163.0 million

Area

148,460 sq km

Currency

Bangladeshi Taka (1 BDT = 0.0122 USD as of 18 September 2017)

Official language

Bangla

Form of government

Republic

Ease of doing business by World Bank

# 176 out of 190 in 2017 (2)

The Global Competitiveness Index by the World Economic Forum

# 106 out of 138 in 2016/17 (1)

Logistics Performance Index by World Bank

# 87 out of 160 in 2016

Major merchandise exports (% of total, 2016)

Major merchandise imports (% of total, 2016)

Readymade garments (69.4%)

Textiles (10.2%)

Jute products (2.4%)

Capital machinery (8.8%)

Leather products (1.4%)

Iron & steel (7.3%)

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

USA (13.0%)

China (21.5%)

Germany (10.8%)

India (13.4%)

UK (8.3%)

Singapore (6.2%)

Source: Economist Intelligence Unit

Political Highlights

 

Bangladesh’s two main parties - the Awami League (AL) and the Bangladesh Nationalist Party (BNP) - dominate local politics. The secular, centre-left AL, which has been in power since 2009, has been focusing on improving ties with India and limiting religious influences in politics. The Islamic, centre-right BNP leads the opposition and tends to be more nationalistic. In the general election held in 2014, the ruling AL won a landslide victory as the BNP and its allies boycotted the election due to concerns over fairness. Prime Minister Sheikh Hasina was re-elected for her third term for another five years.

An officially secular but Muslim-majority country, Bangladesh has seen a rise of violent attacks. Tension between secularists and conservative Muslims will continue to pose threats to social stability. Bangladesh is a lower middle income country as classified by the World Bank. Although it has made substantial progress in reducing poverty, about 28 million people are still living below the poverty line. The government's priority is to promote economic development and continue to maintain its broadly business-friendly policies, in order to promote private-sector participation in the economy and attract foreign investment.

Economic Trend

* Estimates  

Source: International Monetary Fund

 

Garment manufacturing is the backbone of Bangladesh’s economy, generating approximately 70% of the country's export revenues. Plentiful supply of labor force helps attract foreign direct investment in the sector. Today, Bangladesh is the world's second-largest apparel exporter behind China. In the meantime, remittances from overseas workers, which account for roughly 7% of GDP, have also contributed to the economy. Bangladesh has consistently maintained economic growth of over 6% over the past decade, making it one of the world’s fastest-growing economies.

Thanks to prudent monetary policy and fiscal discipline, Bangladesh’s macroeconomic stability has improved in recent years. Inflation continued to ease, helped in part by favorable agricultural production and low global commodity prices. International reserves have risen further, and the public debt-to-GDP ratio has remained largely stable at a moderate level.

While the garment industry is the largest export sector, prospects for the economy as a whole will still be influenced by the agriculture sector, which is the single largest contributor to employment. Therefore, it would make sense to invest more in irrigation infrastructure to raise productivity in agriculture. In the meantime, maintaining the economy’s impressive growth performance in the past decade will become increasingly challenging, as the threat of political instability and the rise in religious extremism have held back business activity, and the economy is increasingly strained by inadequate infrastructure.

 

Hong Kong – Bangladesh Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Bangladesh increased by 1.0% from HK$11,502 million in 2015 to HK$11,616 million in 2016. The top three export categories to Bangladesh were: (1) textiles (-2.7%), (2) telecommunications, audio & video equipment (+5.1%), and (3) clothing & clothing accessories (+4.2%), which represented 66.1% of total exports to Bangladesh.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) basically imposes no restrictions on covering Bangladeshi buyers. For 2016, the number and amount of credit limit applications on Bangladesh decreased by 41.9% and 58.6% respectively. Insured business decreased by 20.0%. Major insured products were textiles, electrical appliances and clothing, which represented 98.5% of ECIC’s insured business on Bangladesh. The Corporation’s underwriting experience on Bangladesh has been satisfactory, with no claim payment or payment difficulty case reported during the past 12 months (September 2016 to August 2017).

 

Please click here to download the charts (PDF format)

 

Last update: 25 September 2017

 


 

Key Information

Capital

Kuwait City

Population

4.3 million

Area

17,818 sq km

Currency

Kuwaiti dinar (pegged to a basket of currencies, 1 KWD = 3.3183 USD as of 13 September 2017)

Official language

Arabic

Form of government

Constitutional monarchy

Ease of doing business by World Bank

# 102 out of 190 in 2017 (4)

The Global Competitiveness Index by the World Economic Forum

# 38 out of 138 in 2016/17 (4)

Logistics Performance Index by World Bank

# 53 out of 160 in 2016

Major merchandise exports (% of total, 2016)

Major merchandise imports (% of total, 2016)

Oil & oil products (89.6%)

Consumer goods (40.0%)

Non-oil (10.4%)

Intermediate goods (40.0%)

 

Capital goods (19.7%)

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

South Korea (15.1%)

China (13.9%)

China (13.0%)

USA (11.7%)

Japan (8.6%)

United Arab Emirates (8.3%)

Source: Economist Intelligence Unit

 

Political Highlights

 

Kuwait is an Arab country with a Sunni Muslim majority. It is a constitutional monarchy which is ruled by the Al-Sabah family. Ultimate executive power is held by the emir, the emirate ruler who appoints the prime minister and the government. The Al-Sabah family usually holds key posts in the cabinet, such as ministries of foreign affairs, defense and interior. Although there are no formal political parties, Kuwait has a strong electoral tradition. It is the first Arab country in the Gulf to have an elected parliament. Full political rights have been granted to women, who can vote and stand as candidates in elections for parliament.

While Kuwait escaped radical political alterations brought across the Middle East by the Arab Spring, there are demands from the opposition for more political rights and pressures to implement constitutional reforms. At the same time, frictions between the executive and parliament persist. Although the situation does not endanger the Al-Sabah family’s dominance, the frictions pose a potential threat to the smooth passage of legislation and to government effectiveness.

In the face of regional security threats, Kuwait made it illegal to finance terrorist groups. Given Kuwait’s relatively small size and inability to carry significant weight alone in the international community, strengthening political and economic ties with its five other Gulf Cooperation Council neighbors will remain a key policy objective. Also, its long-standing strategic alliance with the US will continue.

Economic Trend


#
Actual * Estimates ^ Forecasts

Source: Economist Intelligence Unit

 

Kuwait is one of the richest Arab countries. It controls roughly 6% of the world’s oil reserves. The oil and gas sector dominates the economy, making up about 60% of the country’s GDP and about 95% of export revenues. However, low oil prices have negatively affected Kuwait’s economy. Fiscal balances have swung from surplus into deficit, while real GDP is expected to contract in 2017, reflecting lower oil output on the back of the OPEC agreement to cut production.

Nevertheless, Kuwait is well positioned to mitigate the impact of low oil prices on the economy. According to the Sovereign Wealth Fund Institute, the Kuwait Investment Authority managed about US$592 billion in assets (as of June 2016), which provide policy space to increase public investment to support growth. In the meantime, the government is attempting to reduce subsidies to contain expenditure.

A new normal of low oil prices has demonstrated the importance of diversifying the economy. To address the issue, the government unveiled a five-year development plan (2015-2019) that focuses on economic diversification and the implementation of several strategic mega-projects to boost investment. However, frictions between the government and parliament may hold back the process of diversification.

 

Hong Kong – Kuwait Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Kuwait decreased by 23.8% from HK$1,588 million in 2015 to HK$1,209 million in 2016. The top three export categories to Kuwait were: (1) telecommunications, audio & video equipment (-32.3%), (2) office machines & computers (+1.5%), and (3) photographic apparatus, equipment and supplies and optical goods, nes; watches and clocks (-12.1%), which represented 72.7% of total exports to Kuwait.

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Kuwaiti buyers. Currently, the insured buyers in Kuwait are mainly small and medium sized companies. For 2016, the number and the amount of credit limit applications on Kuwait decreased by 40.0% and 63.8%, respectively, while the insured business decreased by 5.4%. Major insured products were electrical appliances, clothing and furniture, which represented 48.2% of ECIC’s insured business on Kuwait. The Corporation’s underwriting experience on Kuwait has been satisfactory, with one payment difficulty case of small amount reported in the past 12 months (from September 2016 to August 2017), involving furniture.

Please click here to download the charts (PDF format)

 

Last update: 25 September 2017

 


 

Key Information

Capital

Doha

Population

2.6 million

Area

11,586 sq km

Currency

Qatari riyal (pegged to the US dollar at 1 USD = 3.64 QAR)

Official language(s)

Arabic

Form of government

Monarchy

Ease of doing business by World Bank

# 83 out of 190 in 2017 (9)

The Global Competitiveness Index by the World Economic Forum

# 18 out of 138 in 2016/17 (4)

Logistics Performance Index by World Bank

# 30 out of 160 in 2016

Major merchandise exports (% of total, 2015)

Major merchandise imports (% of total, 2015)

Fuels and mining products (84.2%)

Manufactured goods (70.6%)

Manufactured goods (15.4%)

Agricultural products (9.3%)

Agricultural products (0.2%)

Fuels and mining products (6.6%)

Top three export countries (% of total, 2015)

Top three import countries (% of total, 2015)

Japan (20.8%)

European Union (29.8%)

South Korea (17.3%)

China (11.5%)

India (11.9%)

USA (11.0%)

Source: Economist Intelligence Unit, World Trade Organization

Political Highlights

 

Qatar is ruled by the Al-Thani family. Power is concentrated in the hands of emir Sheikh Tamim bin Hamad al-Thani, and there are no political parties or labor unions. Despite being geographically small, the Gulf country has the world’s third-largest natural-gas reserves, making it one of the world’s richest countries in terms of GDP per capita. With substantial accumulated wealth, many public services are free or heavily subsidized and Qatar has largely avoided the political instability that some Middle Eastern countries have suffered as a result of the Arab Spring.

After winning its bid to host the 2022 Football World Cup, the government expedited large infrastructure projects including roads, transportation, stadiums and other sporting facilities. Preparations for the event have led to a construction boom, and there are over 2 million migrant workers in the country. However, the treatment of migrant workers is frequently criticized by rights groups, and in response, the government announced labor reforms last year to abolish a controversial labor law.

Qatar has recently been locked in a diplomatic crisis as several countries, such as Saudi Arabia, the UAE, Bahrain and Egypt, severed diplomatic ties in June and closed their air routes as well as land and sea borders with Qatar, accusing it of supporting terrorist groups. Qatar until the crisis largely imported dairy products from Saudi Arabia and food through the UAE ports. Faced with dwindling supplies of essentials, Qatar has established alternative trade routes and diversified import suppliers. Nevertheless, the standoff, if prolonged, could pose a risk to the country’s political stability.

Economic Trend

 

^Forecasts

Source: Economist Intelligence Unit, International Monetary Fund

Qatar’s economy relies heavily on exports of oil and gas, which accounts for more than 50% of GDP and government revenue. Persistently low oil prices since mid-2014 have had significant impact on its fiscal balances, prompting the government to respond by canceling or delaying some projects and raising domestic fuel prices. Despite fiscal consolidation, Qatar posted its first budget deficit in 15 years in 2016, and saw its public debt level soar.

That said, Qatar has sizable asset buffers, including roughly US$35 billion in net international reserves at the central bank and more than US$300 billion of assets managed by the Qatar Investment Authority. In the meantime, the government has been working to diversify the economy into other industries including transportation, tourism, financial services, medical services, among other things.

Real GDP growth is expected to slow sharply to 0.8% in 2017, as the economy is adjusting to the effects of the diplomatic crisis. The associated blockade led to a sharp contraction in imports in June (40% year-over-year), with only a slight recovery in July. Another contributing factor to the slowdown is compliance with the OPEC agreement to curb oil production. Although the infrastructure programme for the 2022 Football World Cup is back on track after delays in previous years, the stalemate with Gulf neighbors will continue to weigh on business sentiment and derail the government's diversification plans.

Hong Kong – Qatar Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Qatar decreased by 10.5% from HK$946 million in 2015 to HK$846 million in 2016. The top three export categories to Qatar were: (1) telecommunications, audio & video equipment (-2.3%), (2) travel goods, handbags and similar containers (+36.5%), and (3) office machines & computers (-25.2%), which represented 65.2% of total exports to Qatar.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no special restrictions on covering Qatari buyers. For 2016, the number and the amount of credit limit applications decreased by 12.5% and 26.5%, respectively. Insured business decreased by 76.3%. Major insured products were electrical appliances (+37.7%), footwear (+59.3%) and clothing (-95.4%), which represented 83.6% of ECIC’s insured business on Qatar. The Corporation’s underwriting experience on Qatar has been satisfactory, with one payment difficulty case reported during the past 12 months (from September 2016 to August 2017), involving office & stationery supplies.

 

 

Please click here to download the charts (PDF format).

 

Last update: 12 September 2017



 

Key Information

Capital

Sanaa

Population

25.1 million

Area

527,968 sq km

Currency

Yemeni Rial (pegged to the US dollar at 1 USD = 250 YER)

Official language

Arabic

Form of government

Republic

Ease of doing business by World Bank

# 179 out of 190 in 2017 (no change)

Major merchandise exports (% of total, 2014)

Major merchandise Imports (% of total, 2014)

Fuels and mining products (73.9%)

Manufactured goods (50.6%)

Manufactured goods (7.0%)

Agricultural products (26.4%)

Agricultural products (6.3%)

Fuels and mining products (1.0%)

Top three export markets (% of total, 2015)

Top three import markets (% of total, 2015)

Saudi Arabia (32.2%)

United Arab Emirates (11.5%)

Oman (17.0%)

China (10.8%)

Somalia (6.6%)

European Union (8.9%)

Sources: Economist Intelligence Unit, World Trade Organization

Political Highlights

 

Yemen is a country located at the southern tip of the Arabian Peninsula. The majority of Yemen's population is Sunnis, who reside predominantly in the south of Yemen, while Zaidis, who follow a branch of Shia Islam, are concentrated in the northern part. The country is in the midst of a complicated conflict with different forces fighting for control. The main fight is between forces loyal to Sunni president Abdrabbuh Mansour Hadi and those allied with Zaidi Shia rebels known as Houthis, who forced Hadi to resign in January 2015 and flee the capital Sanaa.

Hadi, who is supported by Saudi Arabia and recognized by the international community as Yemen's legitimate leader, has set up a temporary capital in the city of Aden. A Saudi-led coalition started military action in March 2015, in order to restore Hadi’s government to power and stop Houthis from gaining more ground. In April 2016, the United Nations brokered a "cessation of hostilities" and initiated peace talks in Kuwait, but the talks broke down later and fighting continued. Meanwhile, the involvement of other Islamist militant groups has further complicated the situation.

Yemen is strategically important as it sits on the Bab al-Mandab strait, a narrow waterway linking the Red Sea with the Gulf of Aden. On average, nearly 4 million barrels of oil pass daily through the strait. Tankers carrying crude from Saudi Arabia, the United Arab Emirates, Kuwait and Iraq have to pass through it to reach the Suez Canal and Europe. The gulf states and Egypt fear a Houthi takeover would threaten passage through the strait. The conflict between the Houthis and the Hadi government is also seen as part of a regional power struggle between Sunni-ruled Saudi Arabia and Shia-ruled Iran.

Economic Trend


* Estimates

Source: International Monetary Fund

 

Prior to the conflict, Yemen was highly dependent on the export of oil resources, which accounted for over 60% of government revenue. The government had tried to diversify the economy through a reform program designed to bolster non-oil sectors and foreign investment. However, the conflict that began in 2014 stalled these reform efforts, and also led to widespread disruptions of economic activities and damages to oil pipelines and infrastructure.

Official statistical reporting on Yemen is no longer available, while the World Bank estimated that Yemen’s economy has contracted by about 40% since 2015, as oil and gas production has been largely suspended during the period. Public finances are under severe stress and the government needs to delay many public expenditure obligations. Meanwhile, shortages resulting from the conflict and the Saudi-imposed blockade have caused surges in the prices of many goods, particularly fuel and food.

The economic prospects of Yemen in 2017 and beyond will depend on whether the political and security situations could be improved rapidly. According to the United Nations, 20.7 million people in Yemen (over 80% of the population) require some kind of humanitarian assistance. To rebuild the economy in a post-conflict period, the country will require significant assistance and donor support from the international community.

Hong Kong – Yemen Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Yemen increased by 28.4% from HK$11 million in 2015 to HK$14 million in 2016. The top three export categories to Yemen were: (1) telecommunications, audio & video equipment (+56.0%), (2) power generating machinery and equipment (+72.1%), and (3) electrical machinery, apparatus & appliances, & parts (-45.4%), which represented 59.2% of total exports to Yemen.

 

Source: Census and Statistics Department of Hong Kong

  

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) offers coverage on Yemeni buyers with payment terms in Irrevocable Letter of Credit (ILC).  In the past 12 months (from September 2016 to August 2017), there was no insured business on Yemen.

 

 

Please click here to download the charts (PDF format).

 

Last update: 12 September 2017



 

Key Information

Capital

Warsaw

Population

38.4 million

Area

312,685 sq km

Currency

Polish Zloty (1 PLN = 0.2756 USD or 0.2334 EUR as of 24 August 2017)

Official language

Polish

Form of government

Parliamentary republic

Ease of doing business by World Bank

# 24 out of 189 in 2017 (1)

The Global Competitiveness Index by the World Economic Forum

# 36 out of 138 in 2016/17 (5)

Logistics Performance Index by World Bank

# 33 out of 160 in 2016

Major merchandise exports (% of total, 2015)

Major merchandise imports (% of total, 2015)

Manufactured goods (78.7%)

Manufactured goods (78.0%)

Agricultural products (14.2%)

Fuels and mining products (10.9%)

Fuels and mining products (6.9%)

Agricultural products (10.3%)

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

European Union (78.9%)

European Union (59.6%)

Russia (2.9%)

China (12.4%)

USA (2.4%)

Russia (6.1%)

Source: Economist Intelligence Unit, the World Trade Organization

Political Highlights

 

Poland is a parliamentary republic. Parliamentary elections are held at least once every four years. Beata Szydlo of the right-wing Eurosceptic Law and Justice party (PiS) became prime minister in 2015, following the party's general election victory. With a majority in the lower house, PiS was the first party to govern Poland alone in the country’s post-communist era, as the party successfully tapped into nationalist sentiment tied to fears over migration, particularly among young voters.

 

The government has made a series of changes to the country’s institutions and increased its control over the media, judicial system and constitutional court. The controversial moves have made domestic politics more polarized and have drawn concerns from the EU that they would undermine the country’s rule of law and media freedom. Poland also refused to abide by EU mandatory refugee resettlement quotas. In June 2017, the EU launched infringement proceedings against Poland for failing to take part in the scheme.

 

While relations with the EU have soured, the Polish government shares similar stances with the US President Donald Trump, on issues such as climate change and immigration. Poland, along with other Nato members, is particularly relieved after Trump endorsed Article 5, which ensures that Nato allies will come to each other's defense in the event of an attack. About 900 US troops are currently in Poland under a Nato operation to reassure the alliance’s Eastern European allies amid concerns over potential Russian aggression. Meanwhile, Poland, who currently gets about two-thirds of its gas from Russia, has been striving to find alternative sources for national security reasons.

Economic Trend


* Estimates

Source: the International Monetary Fund

Poland has the largest economy in Central Europe. It is the main beneficiary of EU Structural Funds and will receive over EUR 80 billion during 2014-2020. Thanks to accommodative monetary and fiscal policies, and substantial EU funding, Poland’s near-term growth outlook is positive. Real GDP growth is expected to accelerate in 2017 and remain strong in 2018, with domestic demand remaining the key driver of the economy. In particular, private consumption is forecast to grow strongly by around 4% in 2017, driven by solid wage growth and higher social spending on welfare benefits.

Although Poland joined the EU in 2004, it is not yet a member of the eurozone. The zloty is not yet within the Exchange Rate Mechanism, which is one of the convergence criteria for entry into the single currency bloc. Poland does not have a target date to adopt the euro. Some politicians objected to the accession as the zloty's sharp fall during the global financial crisis had boosted export competitiveness and played a key role in helping Poland avoid recession. Moreover, the Polish public is hesitant about changing to the euro due to sovereign debt problems of some eurozone members.

With GDP per capita at 69% of the EU average in 2016, there is plenty of room to catch up with the core of the EU in terms of economic development and living standards. As such, structural reforms to boost productivity are needed, especially when competitive advantage based on low manufacturing and labor costs is being eroded by rising prosperity. So far, Poland’s investment in research and development (R&D) has been relatively insufficient. In 2015, expenditure on R&D as a percentage of GDP was 1% compared to the EU average of 2.03%. This shortfall could further threaten Poland’s ability to catch up.

 

Hong Kong – Poland Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Poland increased by 10.4% from HK$9,139 million in 2015 to HK$10,085 million in 2016. The top three export categories to Poland were: (1) telecommunications, audio & video equipment (+56.4%), (2) electrical machinery, apparatus & appliances, & parts (-7.4%), and (3) office machines & computers (+3.8%), which represented 79.3% of total exports to Poland.

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Polish buyers. Currently, the insured buyers in Poland range from small and medium sized companies to listed companies. For 2016, the number of credit limit applications on Poland decreased by 12.4% while the amount of credit limit applications increased by 32.6%. The insured business decreased by 28.5%. Major insured products were electrical appliances (-0.9%), chemical products (-43.5%) and electronics (-49.0%), which represented 59.9% of ECIC’s insured business on Poland. The Corporation’s underwriting experience on Poland has been acceptable, with three payment difficulty cases reported in the past 12 months (August 2016 to July 2017), involving jewellery and electrical appliances.

Please click here to download the charts (PDF format)

 

Last update: 28 August 2017



 

Key Information

Capital

Belgrade

Population

7.1 million

Area

77,474 sq km

Currency

Serbian Dinar (1 RSD = 0.0099 USD as of 21 August 2017)

Official language(s)

Serbian

Form of government

Republic

Ease of doing business by World Bank

# 47 out of 190 in 2017 (7)

The Global Competitiveness Index by the World Economic Forum

# 90 out of 138 in 2016/17 (4)

Logistics Performance Index by World Bank

# 76 out of 160 in 2016

Major merchandise exports (% of total, 2015)

Major merchandise imports (% of total, 2015)

Manufactured goods (67.6%)

Manufactured goods (62.9%)

Agricultural products (22.4%)

Fuels and mining products (16.2%)

Fuels and mining products (8.1%)

Agricultural products (9.5%)

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

European Union (66.2%)

European Union (63.1%)

Bosnia and Herzegovina (8.3%)

China (8.3%)

Russia (5.3%)

Russia (7.9%)

Sources: Economist Intelligence Unit, the World Trade Organization

 

Political Highlights

 

Serbia became a stand-alone sovereign country in 2006 following Montenegro’s request for independence from the Union of Serbia and Montenegro. It is a parliamentary democracy with a multi-party system. Under the constitution, the post of president is largely ceremonial and the prime minister holds executive power. In the parliamentary election in 2016, the center-right pro-EU Serbian Progressive Party (SNS), which has been in power since 2012, retained the majority in parliament by winning 131 of the 250 seats. Its leader, Aleksandar Vucic, won the 2017 presidential election and Ana Brnabic was appointed prime minister.

The government’s main tasks are to continue economic reform and its drive towards EU membership. The reforms include squeezing the public sector, privatising state-owned companies and expanding the private sector. In terms of accession to the EU, Serbia was formally invited to begin European Union (EU) membership negotiations in 2014. It aims to finish negotiations with the EU by 2019 and become an EU member as soon as possible thereafter. However, Serbia’s strained relation with Kosovo, which unilaterally declared independence from Serbia in 2008, has been one of the biggest hurdles to concluding the accession talks.

While Serbia is pursuing EU membership, it hopes to maintain good relations with its traditional ally, Russia, with which it shares Slav and Orthodox Christian history. However, Russia opposes the integration of Balkan countries (including Serbia) into the EU, and is trying to extend its influence. Meanwhile, Serbia has strengthened ties with China and they have agreed to cooperate on several big projects, including the construction of railways and roads in Serbia. Serbia’s strategic location in Eastern Europe has made it a vital point in China’s attempts to link its Belt and Road Initiative to Central Europe.

Economic Trend


*Estimates

Source: the International Monetary Fund (IMF)

Serbia is an investment destination for manufacturing and processing industries. This is supported by its strategic location, relatively cheap and skilled labor force, and the economic reforms it is undergoing as part of the IMF agreement and the EU accession process. It also benefits from free trade agreements with the EU, Russia, Turkey, and countries that are members of the Central European Free Trade Agreement.

 

In 2016, real GDP grew by 2.8% year-on-year, the fastest pace since 2008. It was driven mainly by a continuously strong expansion of exports and a modest increase in domestic demand. On the supply side, economic growth was broad-based as almost all sectors expanded. In the short term, economic growth is forecast to accelerate and be increasingly driven by private consumption.

Over the past few years, Serbia has undertaken significant economic reforms and fiscal consolidation, in order to correct its macroeconomic imbalances. Last year, fiscal deficit was narrowed sharply to 1.3% of GDP, the lowest level in nearly a decade, while public debt started to decline.

Despite economic development, Serbia’s GDP per capita was only 36% of the European Union average in 2016 according to Eurostat, the statistical office of the European Union. Serbia’s main challenges are to improve living standards in the country and transform the economic recovery into more jobs in the private sector.

Hong Kong – Serbia Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Serbia increased by 29.9% from HK$463 million in 2015 to HK$601 million in 2016. The top three export categories to Serbia were: (1) telecommunications, audio & video equipment (+49.0%), (2) office machines & computers (+46.8%), and (3) power generating machinery and equipment (+12.0%), which represented 81.2% of total exports to Serbia.

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Serbian buyers.  The Corporation’s underwriting experience on Serbia has been satisfactory, with no claim payment or payment difficulty case reported during the past 12 months (from August 2016 to July 2017).

 

 

Please click here to download the charts (PDF format).

 

Last update: 21 August 2017



 

Key Information

Capital

Bishkek

Population

5.9 million

Area

199,951 sq km

Currency

Kyrgystani Som (1 KGS = 0.0145 USD as of 17 August 2017)

Official language

Kyrgyz

Form of government

Republic

Ease of doing business by World Bank

# 75 out of 190 in 2017 (2)

The Global Competitiveness Index by the World Economic Forum

# 111 out of 138 in 2016/17 (9)

Logistics Performance Index by World Bank

# 146 out of 160 in 2016

Major merchandise exports (% of total, 2015)

Major merchandise imports (% of total, 2015)

Precious metals & stones (45.5%)

Mineral products (20.0%)

Mineral products (7.2%)

Machinery & equipment (13.1%)

Textiles (4.7%)

Chemicals (9.1%)

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

Russia (21.7%)

China (32.8%)

Kazakhstan (18.2%)

Russia (26.5%)

Turkey (8.1%)

Kazakhstan (17.4%)

Sources: Economist Intelligence Unit

Political Highlights

 

Kyrgyzstan is a landlocked, mountainous country located in Central Asia. Most of its nearly six million people are Turkic-speaking Muslims. Kyrgyz is the major ethnic group (71% of population), followed by Uzbek (14%) and Russian (8%). As a former Soviet republic, Kyrgyzstan has faced obstacles in reforming its political structure. It adopted a parliamentary system in 2011 but political environment remained volatile. In 2016, Sooronbay Jeenbekov was elected by the parliament as prime minister. He is the 18th man to serve as prime minister of Kyrgyzstan within 25 years since the country’s independence. The next parliamentary election is scheduled for 2020.

The government’s main policy challenges include reducing the poverty rate (2015: 32% of population), reviving the economy in the aftermath of regional economic downturn, and harnessing the country’s natural resources. It also needs to resolve a long-standing dispute over ownership structure with a Canadian firm, which operates the country’s biggest gold mine. Meanwhile, tensions between Kyrgyz and Uzbek also represent a risk to social stability.

Kyrgyzstan joined the Russian-led Eurasian Economic Union (EEU) in 2015, which allows for the free movement of labour, goods, services and capital within the bloc. The bloc members also include Armenia, Belarus and Kazakhstan. Meanwhile, ties with China have been strengthening through multilateral arrangements including the Shanghai Cooperation Organization (SCO) and the Program of Cooperation between Kyrgyzstan and China 2015-2025.

Economic Trend


* Estimates

Source: the International Monetary Fund (IMF)

 

Kyrgyzstan is rich in mineral resources. Kumtor, its major gold mine, accounts for about 10% of GDP. The country also relies heavily on worker remittances from workers abroad (primarily in Russia), equivalent to about 30% of GDP in 2011-2015. The decline in commodity prices since mid-2014 and the subsequent regional economic slowdown have weighed on the economy. While pressures on the economy are moderating thanks to a stabilizing regional context, subdued consumption and low investment are expected to continue to constrain growth prospects.

Weaker economic growth in recent years has put pressures on Kyrgyzstan’s macroeconomic stability. In 2015, the International Monetary Fund approved a three-year US$ 92.4 million Extended Credit Facility arrangement for Kyrgyzstan, in order to support the country’s fiscal sustainability, and to reduce vulnerabilities stemming from weak regional environment and dependency on gold and remittances. In exchange for the assistance, the government is required to implement prudent economic policies and structural reforms such as boosting tax revenues and reducing the wage bill.

Currently, mining constitutes the bulk of Kyrgyzstan’s export earnings, leaving the economy vulnerable to external shocks. The country has sought to attract foreign investment to expand its export base, including the construction of hydroelectric dams. But a significant improvement in the business environment would be essential to achieve this, as the protracted disagreements between the government and the country’s largest foreign investor, as well as frequent personnel changes in key government positions, have made the environment more uncertain. Meanwhile, Kyrgyzstan has a relatively high degree of dollarization. The IMF estimated that deposit dollarization ratio was 55% and loan dollarization ratio was 43% at the end of 2016. The dollarization increases the country’s exchange rate exposure, as the exchange rate movements could strongly affect the demand for credit and choice of currency.

Hong Kong – Kyrgyzstan Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Kyrgyzstan increased by 40.5% from HK$42 million in 2015 to HK$59 million in 2016. The top three export categories to Kyrgyzstan were: (1) telecommunications, audio & video equipment (+49.0%), (2) photographic apparatus, equipment and supplies and optical goods, nes; watches and clocks (+6.3%), and (3) office machines & computers (+37.9%), which represented 82.0% of total exports to Kyrgyzstan.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) offers coverage on Kyrgyzstani buyers with payment terms in Irrevocable Letter of Credit (ILC). In the past 12 months (from August 2016 to July 2017), there was no insured business on Kyrgyzstan.

 

 

Please click here to download the charts (PDF format).

 

Last update: 15 August 2017



 

Key Information

Capital

Muscat

Population

4.4 million

Area

309,500 sq km

Currency

Omani Rial (pegged to the US dollar at 1 USD = 0.3845 OMR)

Official language(s)

Arabic

Form of government

Monarchy

Ease of doing business by World Bank

# 66 out of 190 in 2017 (3)

The Global Competitiveness Index by the World Economic Forum

# 66 out of 138 in 2016/17 (4)

Logistics Performance Index by World Bank

# 48 out of 160 in 2016

Major merchandise exports (% of total, 2015*)

Major merchandise imports (% of total, 2014*)

Fuels and mining products (54.1%)

Manufactured goods (73.0%)

Manufactured goods (12.6%)

Agricultural products (13.4%)

Agricultural products (3.9%)

Fuels and mining products (12.9%)

Top three export countries (% of total, 2016)

Top three import countries (% of total, 2016)

China (43.6%)

United Arab Emirates (45.1%)

United Arab Emirates (7.5%)

European Union (7.8%)

India (3.8%)

China (4.8%)

* Most recent year for which data are available

Sources: Economist Intelligence Unit, the World Trade Organization

 

Political Highlights

 

Oman is a relatively small oil-producing kingdom and has been ruled by Sultan Qaboos bin Said Al-Said since 1970. Following a wave of pro-democracy protests across the Arab world in 2011, Oman has been pushing cautious reforms, including broadening the powers of the legislative body, and the country remains relatively stable. However, the Sultan is now at age 76 and there is uncertainty over the future transfer of power, as he is childless with no obvious heir.

The country has so far been spared the militant Islamist violence that has plagued some of its neighbours. It has managed to stay out of disputes and largely fend off threats from extremist groups. It maintains good relationships with Western allies and other Middle Eastern countries, and acts as a mediator between opposing sides. Meanwhile, Oman also maintains strong economic ties with China, an important trading partner and a major source of foreign direct investment.

 

Economic Trend


#
Actual * Estimates
Source: International Monetary Fund


Oman’s economy is based primarily on the hydrocarbon sector, which accounts for nearly 70% of government revenue. Like the other Gulf countries, Oman’s finances have been hit hard by the plunge of oil prices since 2014. As Oman lacks ample oil and fiscal reserves that its wealthy neighbours possess, it has less room to cope with large budget deficits, and resorts to borrowing from both domestic and external sources. The government’s 2017 budget plan includes fresh austerity measures, but additional fiscal adjustments will be needed to restore sustainability.

 

Economic growth for 2017 will continue to be constrained by a number of factors. Government spending cuts will weigh on economic activity, including private consumption, which will suffer from subsidy cuts and slower public-sector wage growth. In the meantime, cuts in oil production agreed with OPEC will also retard growth.

 

Moving forward, Oman hopes to diversify its economy away from the hydrocarbon sector. The ninth five year plan, covering 2016 to 2020, focuses on the development of non-oil sectors such as manufacturing, transportation and logistics, tourism, fisheries and mining. It also encourages a bigger role of the private sector in the economy through privatization programs, developing small and medium enterprises, and improving the investment climate. Given the dominance of the oil sector in the economy, these reforms are expected to take time.  

 

Hong Kong – Oman Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Oman increased by 26.2% from HK$787 million in 2015 to HK$993 million in 2016. The top three export categories to Oman were: (1) telecommunications, audio & video equipment (+18.6%), (2) power generating machinery and equipment (+100.3%), and (3) office machines & computers (-18.3%), which represented 82.1% of total exports to Oman.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Omani buyers. For 2016, the number and the amount of credit limit applications on Oman increased by 14.3% and 111.8% respectively, while insured business decreased by 11.0%. Major insured products were clothing (-18.6%), electrical appliances (-40.7%) and chemical products (+94.4%), which represented 42.6% of ECIC’s insured business on Oman. The Corporation’s underwriting experience on Oman has been satisfactory, with no payment difficulty or claim payment case reported during the past 12 months (August 2016 to July 2017).

 

 

 

Please click here to download the charts (PDF format).

 

Last update: 9 August 2017

 



 

Key Information

Capital

Seoul

Population

50.8 million

Area

99,720 sq km

Currency

South Korean Won

(1 KRW = 0.0009 USD as of 3 August 2017)

Official language

Korean

Form of government

Presidential republic

Ease of doing business by World Bank

# 5 out of 190 in 2017 (1)

The Global Competitiveness Index by the World Economic Forum

# 26 out of 138 in 2016/17 (No change)

Logistics Performance Index by World Bank

# 24 out of 160 in 2016

Major merchandise exports (% of total, 2016)

Major merchandise imports (% of total, 2016)

Machinery & transport equipment (58.8%)

Machinery & transport equipment (35.1%)

Manufactured goods (13.1%)

Mineral fuels, lubricants & related materials (20.2%)

Chemicals & related products (12.0%)

Manufactured goods (11.7%)

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

China (25.1%)

China (21.4%)

USA (13.5%)

Japan (11.7%)

Hong Kong (6.6%)

USA (10.7%)

Source: Economist Intelligence Unit

 

Political Highlights

 

Following the impeachment of President Park Geun-hye, Moon Jae-in from the liberal Democratic Party was elected president in May 2017, becoming the first liberal president after nine years of conservative rule in the Republic of Korea (often referred to as South Korea). He pledged to reform South Korea’s powerful family-run conglomerates, known as chaebols, which make up the bulk of GDP and are influential over domestic politics. He also pledged to set up a body to investigate corruption by high-ranking public officials, and raise minimum wage and create more public sector jobs.

However, sweeping policy changes are not easy in a divided National Assembly, where Moon's Democratic Party holds only 120 of the 300 seats and the conservative Liberty Korea Party, the second-largest party, holds 107 seats. The lack of a parliamentary majority may impede policy implementation. Therefore, cooperation with the opposition on divisive issues is essential, and Moon may need to first tackle issues with some common ground among political parties and the public.

On the international front, South Korea is facing a dilemma amid escalating threats from North Korea and the strained relations with China. On the one hand, South Korea is on the front line of any North Korean attack and eager to maintain security ties with the U.S., but on the other hand, its attempt to deploy a US missile defense system (THAAD) has strained relations with China, its major trading partner. Moon has so far taken a softer stance toward North Korea than his predecessor. But given that Pyongyang has conducted a series of missile launches since the start of last year, finding a way to ease North Korea’s nuclear threats would be complicated.

 

Economic Trend


^
Forecasts
Source: Economist Intelligence Unit

 

South Korea is an export-oriented economy. Its trade data are viewed as a proxy for the global trade picture because of the country’s heavy dependence on imports of raw materials and exports of goods such as cars and phones. Following decades of impressive economic progress, growth has been relatively sluggish since 2012 due to subdued global trade, and the authorities have responded with fiscal and monetary support. The new government has recently announced a US$ 9.6 billion stimulus package mainly for creating public sector jobs, while the Bank of Korea has maintained its benchmark interest rate at a record low of 1.25%. For 2017, economic growth is forecast to accelerate slightly to 2.9% thanks to a recovery in global trade and an improvement in domestic consumption.

While loose monetary policy has supported economic growth in recent years, mounting household debt has become a side-effect. At the end of last year, household debt rose to a record of 1,344.3 trillion won (US$1.19 trillion), equivalent to over 90% of GDP, and is seen as a major risk to the country’s financial system. High levels of household indebtedness have exerted a drag on private consumption as incomes are diverted to debt servicing. It could also act as a major impediment to economic growth when the central bank tightens monetary policy in the future. In order to contain such risk, the authorities announced more stringent bank screening of loan applications.

South Korea is a strong proponent of free trade. It attempts to bolster its trading position by signing free-trade agreements (FTAs) with important trading partners. Not only has it completed such deals with the European Union (2011) and the US (2012), but in 2015 it finally inked a deal with China as well. There is no doubt that South Korea’s economic success has been achieved on the back of exports, but heavy reliance on exports has recently sparked concerns. On one hand, China’s slowing growth and moving up the value chain might negatively affect South Korea’s exports. On the other hand, protectionist sentiment that is rising around the world and a possible revision of the South Korea-US free trade agreement would also bring uncertainties to the economy. In the longer term, a rebalancing to make the economy less dependent on volatile external demand would increase South Korea’s resilience.

 

Hong Kong – Republic of Korea Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to the Republic of Korea decreased by 0.6% from HK$54,380 million in 2015 to HK$54,040 million in 2016. The top three export categories to the Republic of Korea were: (1) electrical machinery, apparatus & appliances, & parts (-2.3%), (2) telecommunications, audio & video equipment (+2.2%), and (3) office machines & computes (+12.7%), which represented 67.8% of total exports to the Republic of Korea.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering buyers in the Republic of Korea. Currently, the insured buyers in the Republic of Korea range from small and medium sized companies to listed companies. For 2016, the number and the amount of credit limit applications on the Republic of Korea decreased by 21.6% and 58.1% respectively. Insured business decreased by 46.4%. Major insured products were clothing (+126.0%), electrical appliances (-35.7%) and cameras & optical goods (-91.0%), which represented 62.3% of ECIC’s insured business on the Republic of Korea. The Corporation’s underwriting experience on the Republic of Korea has been satisfactory, with three payment difficulty cases and two claim cases in the past 12 months (from August 2016 to Jul 2017), involving jewellery, clothing, mineral products, and camera & optical goods.

 

Please click here to download the charts (PDF format).


Last update: 7 August 2017

 



 

Key Information

Capital

Wellington

Population

4.7 million

Area

268,838 sq km

Currency

New Zealand Dollar (1 NZD = 0.7492 USD as of 31 July 2017)

Official language